Market Snapshot


Frank Homann, Siemens VDO vice president of cockpit modules, "declared the in-vehicle CD player a dead man walking, doomed by a rising tide of portable digital music players, high-tech cell phones and packaging issues" during the SAE International World Congress. According to Ward's Auto, Homann stated that Siemens is working on systems for 2012, which include CD players, but that by 2015 they won't be around.
The future of the CD has been affected by the invention of technologies such as the iPod and iPhone. Homann says that "You will see [in-vehicle] cradles in the future; iPhone cradles. And then some of the technology will migrate into the [vehicle]." However, not everyone involved with in-vehicle entertainment agrees. T.C. Wingrove, senior manager of North American Innovation for Visteon Corp. is one of those people. "I don't think the CD player will be gone by 2015 at all" he told Ward's Auto
Skeptics believe that "stubborn consumers," including "late adopters" and "semi-computer-literate baby boomers" will keep the CD alive for a long time. The CD may eventually disappear like the 8 track, but not by 2015. The Chrysler Group is leading the movement away from the conventional audio-system layout with its MyGig navigation system that uses a computer hard drive to store navigational data instead of an optical disk. MyGig can also store about 100 hours of music, photos and other information. Even with the MyGig, Mike Kane, director for feature innovation and advanced technology strategy for Chrysler, does not see the demise of the CD happening anytime soon. In fact, he believes that "the optical disk is probably around for another 30 years or so."
Newer types of optical disks are expected to be able to store hundreds of songs as compressed audio files.  Furthermore, "digital-rights management issues and the growing popularity of high-definition formats mean DVDs will likely remain the preferred method for viewing movies in vehicles in the foreseeable future, further preserving the optical disk's turf" says Kane.
On the other side of the table, Homann is attempting to make a compelling argument for automakers to eliminate CD players altogether. He claims that the elimination of the CD will "save auto makers $20-$40 per vehicle and will free up real estate within the car." The center stack of the dashboard where most CD players are located, is a great place for navigation systems. According to Ward's data, 19.6% of all 2006 cars built in North America for the United States market had MP3 capability, more than eight times greater than in the 2004 model year. During that same period, "the proliferation of CD players slipped to 95.2% from 99.1%." And only 11.7% of cars featured cassette- tape players in 2006, down from 29.6% in 2004. However, 0.8% of U.S. consumers purchased full-length cassette tapes in 2006, and suppliers shipped more than 700,000 cassette-playing automotive head units to customers last year. Nearly 86% of sound recordings still are purchased on full-length CDs, down only 5% from the 2002 peak of 90.5%. Only 6.7% of recordings were purchased as digital downloads in 2006. Data suggests that consumers load music onto their MP3 players from CDs, and the CDs are still played at home and in their cars.
The data suggests that the CD will be around for a while. However, it is important to start thinking about the future as technologies begin to be replaced by the latest and greatest. If automakers were to stop including CD players in vehicles, this would be a great opportunity for aftermarket sales of CD players to grow. On the other hand, specialty-equipment manufacturers will need to continue to work with the automakers to develop interfaces that will work with all kinds of entertainment systems, from CD players to navigation systems.

Source: Drew Winter. (May 29, 2007). "Are CD Players Headed for Mass Extinction?" Retrieved May 31, 2007 from